HMRC has issued an important reminder for motorists after a change to the mileage rate for employees who drive for work came into effect. In a post on X, the UK tax authority wrote: “Attention drivers. You can now use our updated online form to claim the recently announced increased mileage rate if you use your own vehicle for work.
“Check your eligibility and submit your claim today.” It comes after the Taxation (Energy and Vehicles) Act, which partly aims to support consumers and businesses facing rising energy costs, was enacted this week. Among other measures, it upped the rate for approved mileage allowance payments (AMAPS) for cars and vans from 45p to 55p for the first 10,000 miles. The approved rate defines how much tax-free reimbursement employees can receive for using their own cars for work, including insurance and servicing.
The new rate applies retrospectively from April 6, 2026, covering the 2026/27 tax year and subsequent tax years. The previous rate had remained unchanged for 15 years, despite rising fuel costs, prompting criticism that the allowance no longer covered business mileage costs.
The AMAPS rate remains at 25p beyond 10,000 miles. The rate change doesn’t apply to motorcycles, with owners only able to claim back 20p per mile.
The Government website notes the tax relief “does not include travelling to and from your work, unless it’s a temporary place of work”.
The amount you may be able to claim depends on whether you’re using:
- a vehicle that you’ve bought or leased with your own money
- a vehicle owned or leased by your employer (a company vehicle)
Those eligible can claim for the current tax year and the four previous tax years.
The tax relief covers the cost of owning and running your vehicle, and it’s not possible to make separate claims for things like fuel, electricity, vehicle tax, MOTs, and repairs.
To calculate how much you can claim for each tax year, you’ll need to keep records of the dates and mileage of your work journeys, add up the mileage for each vehicle type you’ve used for work, and subtract any amount your employer pays you towards your costs (sometimes called a ‘mileage allowance’), the GOV.UK website explains.
You can find the full eligibility rules and rates here.
Other measures under the act, implemented with different timelines, include a 12-month holiday from vehicle excise duty for the majority of heavy goods vehicles.
Other measures include an increase in the electricity generator levy (EGL) rate from 45% to 55%.
The levy was introduced to tax high returns earned by some renewable generators as gas-linked energy prices soared.